BRAZIL: Archer says mills have hedged 19.4% of exports so far

Published: 11/14/2017, 11:00:46 AM

Brazilian mills hedged 19.4% of the sugar they expect to export in the 2018/19 centre-south season, or 5.27 million tonnes, as of Oct. 29, Sao Paulo-based Archer Consulting said on Monday, according to Reuters.

Archer said in a report that the amount of sugar hedged by the mills using New York's ICE raw sugar futures contracts is the smallest since the consultancy started to run this type of projection in the 2012/13 season, as low prices on the exchange delay hedging by sugar producers.

Analysts think the hedging delay could impact a possible price recovery for raw sugar futures in New York, since mills who are still waiting for better opportunities to hedge by selling futures contracts are likely to do that as soon as the market rises, capping any upward potential.

But even without a sustained rise in prices, analysts expect the market to offer some spikes in prices in the coming weeks that will allow for more price fixation by mills.

Marcelo Escorel, commercial director at Tereos Sugar & Energy Brazil, the local unit of French sugar producer Tereos, said last week the company has hedged a little more than 20%.

"It has been a long time since the last time we went to the market (for hedging)," he told Reuters on the sidelines of a sugar industry gathering.

The global sugar market is heading toward a supply surplus in the 2017/18 crop cycle (October-September), which as been hitting futures prices.